CVS Caremark 3Q Profit Up But Loses Big Contracts

MARLEY SEAMAN

NEW YORK (AP) — CVS Caremark disclosed more multibillion dollar contract losses in its pharmacy benefits management business and said the head of the unit will depart.

CEO Tom Ryan said CVS, which also runs the nation's second-biggest drug store chain, won't reach its goals in 2010 because of the sharp reversal of fortunes at the Caremark unit, which administers drug benefits for employers. CVS shares plunged 20 percent and took their biggest one-day loss in eight years.

In total, the company lost about $2 billion in 2010 revenue in the last three months. It now believes Caremark has lost $4.8 billion in contracts for next year.

Ryan profits at Caremark could drop as much as 10 or 12 percent compared to 2009. Three months ago, Ryan said CVS would be "very disappointed" if its total per-share profit did not grow 13 to 15 percent next year. He said CVS won't reach that level.

The company said Caremark President Howard McLure will retire Nov. 27, with Ryan taking over temporarily. McLure, 52, became Caremark's chief operating officer in 2005, and was named president when CVS bought Caremark. CVS said McLure had planned to retire for several months.